Home » Big Publishing, Ebooks, Joe Konrath, Pricing, Self-Publishing » Ebook pricing power is undermined by perceived value

Ebook pricing power is undermined by perceived value

26 March 2011

Publishers are going crazy trying to compete against 99 cent ebooks. They thought agency price-fixing would solve their problem, then indie writers started experimenting with lower prices and found out they could make big bucks. Publishers will go out of business if they sell much of anything for 99 cents.

Excerpts from an O’Reilly Radar Q and A article:

Q: How are customer perceptions of ebook value influenced?

Todd Sattersten: There is only one factor that matters right now — what print books cost. Customers compare ebooks to their paper-based ancestors, and they long ago concluded they should be cheaper because everything else in their digital lives is cheaper than their physical lives.

Publishers don’t want this to be true and, with the power to control ebook pricing through the agency arrangements, are pricing the vast majority of ebooks like they are print books. I co-wrote a book two years ago called “The 100 Best Business Books of All Time.” The hardcover retail price is $25.95. On Amazon, you can buy that version for $16.61 or a remaindered edition for $10.38, while the Kindle edition is $18.99. That creates a short circuit in customers’ brains. You don’t pay more for things that are more convenient. You pay less.

What’s interesting is that Amazon is actively discounting books in the 40% to 50% range, and in many cases putting the price of the print book very close to the price of the ebook. There can’t be any margin left at those prices. Amazon, having lost the ability to control ebook pricing, is saying to customers “ebooks and print books are the same.” This drives more people to ebooks (who doesn’t want to download their book now?), sells more Kindles, and further cements their place in publishing’s future — both provider of new and destroyer of old (what bookstore can compete with 49% off?). Also, notice how Amazon is redefining short writings with their Singles program. Fewer words, lower prices and, most importantly, a new (not very good) term to attach to the new value proposition.

Q: Is there a disconnect between publishers and readers that’s influencing the developing price model?

Todd Sattersten: The biggest disconnect is that mainstream publishing’s $9.99 to $19.99 ebooks are now sitting next to Amanda Hocking and J.A. Konraths’ $0.99 ebooks. There was never that risk in the bookstore channel because of the cost of scaling atoms. The wide range of pricing destroys pricing power.

Link to the rest at O’Reilly Radar

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